Thai Recovery Fund focuses on SMEs
Thai Recovery Fund focuses on SMEs
Johannes Simbolon, The Jakarta Post,
Jakarta
To many people, it remains unclear what the Indonesian
Recovery Fund, which was announced by the government last week,
will look like and what it will focus on, as the government has
yet to provide the details.
But, the Thai Recovery Fund, which Minister of Industry and
Trade Rini M. Soewandi referred to as a model while announcing
the new funding scheme on Friday, has a clear focus: small and
medium enterprises.
Documents from various organizations available on the Internet
reveal that Thailand, which was the first country in the region
to be hit by the economic crisis in 1997, has launched at least
two funding schemes bearing the name Thai Recovery Fund.
The first fund worth US$150 million, called the Thailand
Corporate Recovery Fund, was initiated by former U.S. Vice
President Dan Quayle at the fourth annual meeting of the
Thailand-U.S. Business Council and U.S.- Thailand Business
Council.
U.S. investment firm Cerberus Capital Management contributed
$87.5 million to the fund, while the remaining amount was
provided by the Japan Bank for International Cooperation (JBIC)
($25 million) and the Shinsei Bank ($37.5 million).
The fund, managed by Cerberus, focussed on medium-sized firms
in the tourism and agribusiness sectors that were in need of
equity to help restructure their operations.
The second fund, called the Thai Recovery Fund, was announced
last year by Thailand's Ministry of Finance, with contributors
including the Asian Development Bank (ADB), JBIC, KreditAnstalt
fuer Wiederaufbau (KfW) of Germany and U.S.-based money manager
State Street Corporation. State Street became the manager of the
fund.
ADB signed an agreement with the Thai government to invest $50
million in the fund, or 25 percent of the total fund, in March of
this year.
The fund was aimed at spurring small and medium enterprises,
the ADB said in a statement available at its website.
"The Fund's investment in Thai medium-scale private sector
companies will help restructure these companies by reducing their
current high debt-to-equity ratios to more prudent levels. This
will enable many of these companies to make a financial recovery
and return to profitability," Christine Wallich, head of ADB's
private sector group, said.
Few documents are available describing the operation of the
funds and their performance.
But, Thailand's leading English language newspaper The Bangkok
Post was silent about the funds in its 2000 year-end economic
review.
The paper said that small and medium enterprises, which
represent 80 percent of Thailand's industrial producers and
account for 70 percent of all employment, remained in the
doldrums last year.
"Government attempts to revive the economy have not helped
small firms to the extent expected. Most remain short of working
capital and unable to service their debts. To survive, they had
no choice but to continue to lay off workers," the paper said.